March 2012 Existing Homes Sales Show Significant Decline in Inventory from March 2011

The big story for March 2012 existing homes sales was the significant decline in the inventory of homes available for sale (where the months inventory contrasts the current supply, on a seasonally-adjusted basis, to the sales rate). Months inventory in March 2012 was 6.7 months and was down a substantial 24.7 percent from the same month in 2011 (8.9 months).

Sales in March 2012 (on a seasonally-adjusted annualized rate), while down 2.6 percent sequentially from February 2012, were up 5.2 percent from March 2011. As shown in the graph below, housing sales (and this is a 12-month moving average of the seasonally-adjusted, annualized rate) continue to rise. The housing market is finally in a recovery mode, but with annualized sales in March of 4.48 million homes, the current pace is 18.9 percent less than the average in 2002 (which I consider normal given that time period was after the recession of 2001 and prior to the utter stupidity of the greed-fueled and subprime-financed housing bubble that peaked in 2005-2006).

Other good news is that home values appear to have stabilized. While the 12-month moving average of median home prices is still down 26.7 percent from the peak in July 2008, the latest 12-month moving average is essentially unchanged in the past four months. I am now confident that typical U.S. home values have stabilized and I expect them to remain relatively static for the next six months.

The bottom line is that the housing market finally is signaling improvement in the increased number of sales, declining months inventory and static prices. And this is all good news.

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Comments

Realtor Ron 6 years ago

This is all good news, especially to a Realtor that has lived through nearly 7 years of declining market conditions! As I read this, I realize from experience that this kind of comment reflects markets that are “ahead of the recovery curve” that my area has not yet reached ……. that said, this is encouraging to hear as perhaps the trend will continue and the “lights will come on across the nation”.

But what about the fact that the robosigning “issue” slowed down foreclosures and all the other “forcasters” saying the inventories will again rise as mortgage companys release these homes onto the market? I still see homes sitting in my community …….. yards burning up – some secured with boarded up windows.

Additionally, my community usually depends upon being able to sell their homes and use the equity as down payment and closing costs to purchase their next home. Sadly, values dropped to a level that absorbed most of what equity may have existed. Like many – people refinanced their low mortgage amount into higher amounts based upon ultra inflated values in order to buy that boat, car, truck, even vacation home leaving them upside down in today’s world of “reality”.

Yes, I’d like to think that this “crystal ball” forecast is on track but at least for my community, the hike “out of the woods” is a long one and anything can happen before we see that clearing! The increase in sales in our area has been the sale of foreclosed and short sale homes being purchased by investors for rental properties to fill a void in that market as well as first time buyers who generally purchase the lower end properties. Those in the “mid to higher” ranges languish.

While you might be correct that your local market is not improving–but you did not even mention where you are located–I am curious if it is improving but not at the unsustainable price and sales volume levels recorded in the peak of 2006-2007. Perhaps you could reveal where you are located? Or maybe you think the boom years were normal, but alas, they were not.

And I would agree that prices nationwide as an aggregate are nowhere near the peak (but not in all cities). But they will increase in the coming 12 months (not everywhere—but as an aggregate).

I often speak of the fact that there is no national real estate market—every locale is different. Did you not catch that concept in my writings?

And while you conclude that transactions are short sales and foreclosure driven—you must get that inventory off the market to initiate a recovery.

So I will stick with my original conclusion that the country’s residential real estate market did indeed bottom in 2011 and is improving. In Ft Myers-Cape Coral, that bottom occurred in January 2010. And prices are up double digit percentage wise since then (but again, nowhere near the peak of 2007).

Any data you can provide to conclude otherwise? Even from your local market?